Waterways has a sales mix of sprinklers, valves, and controllers as follows. Annual expected sales: Sale of

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Waterways has a sales mix of sprinklers, valves, and controllers as follows.

Annual expected sales:

Sale of sprinklers ...................... 460,000 units at $26.50

Sale of valves ........................ 1,480,000 units at $11.20

Sale of controllers ....................... 60,000 units at $42.50

Variable manufacturing cost per unit

Sprinklers ................................................... $13.96

Valves ......................................................... $7.95

Controllers ................................................... $29.75

Fixed manufacturing overhead cost (total) .......... $760,000

Variable selling and administrative expenses per unit:

Sprinklers ............................................................... $1.30

Valves .................................................................. $0.50

Controllers .............................................................. $3.41

Fixed selling and administrative expenses (total) .......... $1,600,000

1. Determine the sales mix based on unit sales for each product. (Round answers to 0 decimal places, e.g. 25%.)

2. Using the annual expected sales for these products, determine the weighted-average unit contribution margin for these three products. (Round answer to two decimal places, e.g. 5.25.)

3. Assuming the sales mix remains the same, what is the break-even point in units for these products? (Round answer to 0 decimal places, e.g. 2,520.)

Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...
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Managerial Accounting Tools for Business Decision Making

ISBN: 978-1118856994

4th Canadian edition

Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso, Ibrahim M. Aly

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